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The Historical Evolution and Track Record of Multifamily Investments

Updated: Mar 2, 2023

In modern times, it is extremely common for adults to live in apartment buildings, especially younger adults.

This wasn’t always the case. Here we'll provide a brief explanation of the historical evolution of multifamily properties and go over their track record as investment vehicles over the years.

The 1800s

The 1800s is the century in which multifamily properties really started to come into heavy use in America. Prior to the creation of multifamily properties that contained separate, individual apartments for families, in one building, most people lived in tenements. Tenements were similar to apartment buildings, except they often were smaller and had shared bathrooms. Oftentimes these bathrooms were located outdoors, separate from the buildings. Also, up until the 1840s, they did not have running water.

So, when the first multifamily apartment buildings arrived in the mid-1800s, they were considered a major upgrade to traditional tenement buildings. The first multifamily apartment building the was built in America was built in the 1860s in New York City. It was a 5-story building with 16 units and had what were at the time considered luxuries: private toilets and running water.

This building was a major success and soon, many other similar buildings followed suit. As the populations in major cities like New York, Boston, and Philadelphia began to swell in the late 1880s, there was a tremendous demand for multifamily apartments for the middle class. People who could not yet afford to buy their own homes wanted a respectable, clean, and private place to live. So, more and more multifamily homes started to be built.

The 1900s

Strong demand for multifamily properties continued into the 1900s. However, due to the GI Bill which gave returning World War II soldiers access to zero down-payment mortgages with low interest rates, single-family home ownership also continued to expand. But the expansion of suburbs with single-family homes in America helped to keep multifamily property prices affordable and thus popular.

People felt like they were getting good value for their money. Also, new amenities started appearing regularly with multifamily properties in the 1900s. These amenities and features included air conditioning, 9-foot ceilings, walkable locations in desirable city neighborhoods, attractive exteriors, and more.

Some multifamily properties also started to have elevators in the first half of the 1900s. However, this was considered a luxury and the Americans with Disabilities Act hadn’t gone into effect yet, they were not required in multifamily properties. In fact, elevators were considered a luxury until the mid-1900s. They mostly existed in luxurious properties that were frequently rented out by wealthier Americans. Elevators became more and more common during the second half of the 1900s, especially after the Americans with Disabilities Act went into effect in 1990.

The 2000s

Just as more and more amenities started to appear in multifamily apartments during the 1900s, the same is true for the 2000s. Though we are only 22 years into this century, it is now common for multifamily properties to have amenities like swimming pools, gyms, garages, high-speed internets, country club-like atmospheres, package lockers, and more.

Standards are rising for multifamily properties and it is common for tenants to expect more out of their multifamily property. However, despite that this might be a little inconvenient for real estate developers and investors, having the rising quality of life in multifamily properties is one factor among many that is causing people to stay in apartment buildings for longer and longer.

In fact, in the 2010s, the amount of renters surpassed the amount of homeowners in 20 cities in America. Despite the 2008 housing crash and the COVID pandemic, rents have also continued to increase faster than incomes since the year 2000. What this tells us is that demand for multifamily housing is strong and only getting stronger. As more and more desirable amenities start to appear in multifamily properties, demand will likely increase even further. Amenities such as on-demand vehicles owned and insured by the building owners, outdoor spaces such as decks, rooftop decks, dog parks, playgrounds, patios, and coworking spaces, etc. have all become more and more common, and will continue to drive demand for multifamily properties.

The Track Record of Multifamily Property Investments

Multifamily properties are one of the most secure and best-performing assets in the last hundred years. There are many reasons why this is the case. One of the most important is because everyone needs a roof over their heads. Shelter is a basic human need. We all need protection from the elements. The fact that multifamily property solves one of the most basic human needs is one of the main factors behind its incredible performance over the last century.

There are many impressive statistics that prove the effectiveness and value of multifamily property. For example, during the last housing crisis, multifamily investments had a default rate of just .02% compared to 6% for single-family housing. Part of the reason why this is the case is because the risk for multifamily properties is divided amongst many tenants compared to single-family properties where the risk is put entirely on just one tenant or one family.

Another important statistic about multifamily properties is that there are now more U.S. households renting than at any point in 50 years. The demand for multifamily properties is increasing and this trend is not expected to change for at least the next ten years. Every year, roughly 350,000 fewer apartment units are built than the amount required to meet demand. This means that every year, there is a deficit of approximately 350,000 multifamily units.

It is also common for multifamily investments to generate returns between 8-12 percent. In fact, between the years 1992 and 2017, the multifamily asset class generated average annual returns of 9.75%. These returns were higher than the average annual returns of any other type of commercial real estate during this time period.In today’s economy, the average returns have slightly decreased to 5-8 percent; however, that is still stronger than the vast majority of other investments on a consistent basis.


Multifamily real estate is one of the most secure, stable, and consistent investments that you can make. Even during market downturns and once-in-a-generation crises like the COVID pandemic, multifamily property continued to generate consistent returns.

There are many factors that are lining up to keep demand for multifamily investment strong. These include a surge in demand for multifamily properties, a deficit of new apartment units every single year, single-family housing prices being unaffordable for many, and the constant upgrading of amenities.

Essentially, people are renting for longer and longer periods of their lives. Renting has already become more popular than homeownership. The question is how much more popular will it become?

Due to the strong demand and supply shortages, now is actually one of the best times in history to invest in multifamily property. Multifamily properties have made for good investments basically since their inception in the mid-1800s. However, we are now in something of a golden age of multifamily property investing. This trend is likely to continue for some time until and unless the prices of single-family homes drop dramatically.

The bottom line is that multifamily investments are more secure than the vast majority of investments such as stocks, commercial real estate, commodities, cryptocurrencies, etc., and they generally generate consistent returns.


Invest with Blue Lake Capital

If you are an accredited investor interested in learning more about passively investing in multifamily properties, click here to complete our investor form and schedule a call with our Investor Relations team.

About Ellie Perlman

Ellie is the founder of Blue Lake Capital, a commercial real estate investment firm specializing in multifamily investing throughout the United States. At Blue Lake Capital, Ellie partners with both institutional and individual investors to grow their wealth by achieving double-digit returns by investing alongside her in exclusive multifamily deals they usually don't have access to.

A defining factor of Blue Lake Capital’s strategy is founded in utilizing machine learning/artificial intelligence throughout the course of all acquisitions and asset management. This advanced technology enables the company to produce accurate and data-driven forecasting for all assets on a market, property, and even tenant basis. In doing so, Blue Lake is able to lead commercial investments with the full capabilities of today’s technology.

Ellie is the host of REady2Scale, a podcast that highlights the assets, processes, and strategies for the multiple approaches to successful real estate investing.

She started her career as a commercial real estate lawyer, leading real estate transactions for one of Israel’s leading development companies. Later, as a property manager for Israel’s largest energy company, she oversaw properties worth over $100MM. Additionally, Ellie is an experienced entrepreneur who helped build and scale companies by improving their business operations.

Ellie holds a Masters in Law from Bar-Ilan University in Israel and an MBA from MIT Sloan School of Management.

You can read more about Blue Lake Capital and Ellie Perlman at


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